Formation of a Small Business Investment Corp. to provide long-term financing for small business with the ultimate goal of boosting the state's economy received support Tuesday from the Board of Governors of the Salt Lake Area Chamber of Commerce.

Board members unanimously voiced their support for a resolution calling for the chamber's support of the formation, funding and operation of an SBIC. Although the chamber cannot be financially involved in the SBIC, Fred S. Ball, chamber president, said he initially will spend some time in raising money to get the SBIC going.Several months ago, the board appointed a task force to see if the chamber could get involved in formation of an SBIC, and although it soon became evident an SBIC couldn't be an entity of the chamber, there was no prohibition in helping with the formation.

The task force was headed by Peter S. Cooke, owner of PSC Properties, and R. Kent Moon, director of the Utah office of the Small Business Administration. If formed, the SBIC would be licensed by the SBA and would join more than 300 other SBICs in the United States.

Ball said there is a "middle market gap" in financing because bankers generally refuse to lend money to a business for longer than one year. There are many businesses that have been operating for two or three years and they suddenly need capital to expand.

With banks reluctant to lend money for long periods, the businesses suffer and either don't grow or they go out of business, Ball said. In the past two years Utah has fallen woefully short of creating jobs for the number of high school students coming into the workforce, and the SBIC is part of the answer to help create jobs.

Ball said the majority of new jobs will be created by existing business and not by the companies moving in. Because this middle market gap financing is not available, some Utah companies have gone to SBICs in other states for help.

Moon said Utah is on the threshold of economic growth or on the precipice of economic decline, and formation of the SBIC will help avoid the decline. He said the formation of new companies is at the highest rate in history because of "baby boomers" wanting to start their own companies and the increased number of women in the workforce.

Even though the money lent from an SBIC to a company is considered "high risk," Moon said, directors of the SBIC carefully watch the company and how the money is being spent. Investors actually will get a return on the SBIC money because it's considered an investment.

In previous meetings of the task force, members decided it would take about $160,000 to get the SBIC going, including hiring a manager to do some fund raising. Cooke said ideally the SBIC should have at least $14 million to make it a viable operation.

In a somewhat related matter, Yan Ross, an attorney, said the State Retirement Fund trustees have a policy that allows some of its money to be invested in new ventures. But he doesn't know if the present policy will allow some of the retirement money to be invested in an SBIC.